Microsoft makes it easy to start saving for retirement and understanding the different types of 401(k) contributions can help you make informed decisions. Consider your retirement goals and consult with a financial advisor to make the best decision for your future.
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Choosing the right type of 401(k) contribution depends on your current financial situation and future tax expectations.
You can make changes to your contribution amount and types at any time. To do so, simply go to Fidelity NetBenefits, select Contributions, and then click Contribution Amount. Changes generally take effect within one to two pay periods after submission. Any contribution changes confirmed with Fidelity by 5:00PM Pacific time on a Wednesday will be sent to Microsoft on Thursday with an effective date aligned to the earliest possible pay period beginning date.
Let's dive into the different types of 401(k) contributions and explore the distinct features of each:
Pre-tax contributions are deducted from your paycheck before taxes are applied. This means you lower your taxable income for the year, which can result in immediate tax savings. Additionally, your investments grow tax-free until you withdraw them in retirement. However, withdrawals in retirement are taxed as ordinary income, and you must start taking required minimum distributions (RMDs) at age 73.
Roth contributions are made with after-tax dollars, meaning you pay taxes on the money before it goes into your 401(k). Qualified withdrawals in retirement are tax-free, which can be advantageous if you expect to be in a higher tax bracket. Additionally, they don’t require minimum distributions and aren’t restricted based on your adjusted gross income. On the flip side, Roth contributions don’t provide an immediate tax benefit, as they don’t reduce your taxable income for the year.
Save additional money via after-tax (non-Roth) contributions, which can then be converted to Roth within the Plan for tax-free growth. There are no income restrictions on making after-tax contributions. However, the earnings on after-tax contributions are taxed upon withdrawal unless rolled over into a Roth account. These contributions are not matched by Microsoft.
Starting the year you turn 50, you can contribute additional funds to your 401(k) beyond the standard contribution limits. This helps you save even more as you near retirement. Catch-up contributions are not matched by Microsoft.
Note: If you earned more than $145,000 in 2025 and will be age 50 or older in 2026, any catch-up contributions you choose to make to the Microsoft Corporation Savings Plus 401(k) Plan in 2026 must be made on a Roth basis. Additionally, if you'll be ages 60-63 as of December 31, 2026, you qualify for higher catch-up limits in 2026. Learn more about these changes here.
Make up pre-tax contributions missed during an unpaid military leave of absence. The timeframe available to make these contributions is either three times the period of service or five years (whichever is less).
You can make changes to your contribution amount and types at any time. To do so, simply go to Fidelity NetBenefits, select Contributions, and then click Contribution Amount. Changes generally take effect within one to two pay periods after submission. Any contribution changes confirmed with Fidelity by 5:00PM Pacific time on a Wednesday will be sent to Microsoft on Thursday with an effective date aligned to the earliest possible pay period beginning date.
Microsoft will match 50 cents for every dollar you contribute to the pre-tax and/or Roth category of the 401(k) Plan, up to the annual IRS limit. For 2026, the maximum you can contribute to these categories combined is $24,500. If you put in that whole amount, you’ll receive a match from Microsoft of $12,250. Once you reach the IRS maximum, payroll will stop your contributions until the beginning of the next year.
Special note on compensation: You can contribute up to 65% of your eligible compensation. For a detailed definition, see the Eligible Compensation section of the Summary Plan Description.
Annual review bonuses are considered eligible compensation for the Microsoft 401(k) Plan. For this reason, your 401(k) contribution percentages are deducted from bonus amounts received in addition to your regular compensation. The deadlines for making changes to your contribution elections to impact the September bonus paycheck will be posted on the site when available.
Fidelity suggests saving at least 15% of your salary for retirement.
Contribution type | Available to | Maximum 2026 contribution | Eligible for company match? |
Pre-tax and/or Roth contributions | All 401(k) eligible employees | $24,500 (combined) | Yes. The maximum match in 2026 is $12,250 |
Age 50+ catch-up contributions | All 401(k) eligible employees who are 50 or older this year | $8,000 | No |
| Age 60-63 catch-up contributions | All 401(k) eligible employees who are 60-63 this year. | $11,250 | No |
After-tax (non-Roth) contributions | All 401(k) eligible employees | $35,250 | No |
Military make-up contributions | All 401(k) eligible employees who return to work from an unpaid military leave of absence | Make-up contributions are in addition to annual contribution maximum | Yes (based on missed contribution elections that would have been made during the leave of absence) |
Note: Separate sub-accounts (or “sources”) in your 401(k) account will be established for each type of contribution you make to the Plan.